INSIGHTS
SEP
6
COSTA’S CORNER
Normally, I won’t recommend a greatest hits record.
It’s too easy to miss some great music if you just listen to what some producers and artists felt were a quick way to make a dollar but today I will.
Aretha Franklyn’s 30 Greatest Hits will help you understand how great a singer she truly was. Every song is near perfection and while there are several gems missing, Amazing Grace being one of them, this pretty much covers anything and everything you ever wanted to know about Aretha, The Queen of Soul.
The economy still seems to be humming along despite all the worries about the trade war with China and that’s not surprising. Not surprising you say? Yes. Not surprising. The US economy is built on two major themes, Services and Consumers.
The service sector continues to do well, adding jobs at a slower clip but still adding jobs and consumers continue to spend with almost religious vigor.
Let's take the service sector first and try and understand the overall impact of a China/US trade war on it. Apparently, there is no impact and people are still spending to get their driveways repaired, their lawns mowed, they are using the services of financial advisors, and so on. The service sector no matter what any of the business networks tell you have not been nor will they be impacted by the trade war. It’s a US centric business sector that while may have tentacles in China as far as investing is concerned, truly has little exposure to the trials and tribulations of this trade war.
The service sector that is being impacted is mostly in investments and equity market rotations which have put pressure on portfolios at times but in the end, it’s about the economy and the economy is still doing pretty well.
The bigger slice of the economic pie and the one that should be most impacted by a trade war is the consumer sector. Let’s be honest here. If you are feeling good about your job, your growth prospects as far as wages are concerned and you have your house of debt relatively in order, do you really care that some items you buy on a regular basis have gone up 5 or 6%? No, you don’t.
Do you care that the new lawnmower you were going to buy cost $20 more than the last time you bought one 12 years ago? No, you don’t.
I am just saying that the incremental increases we are seeing are being worked into the system just fine and it really isn’t hampering our ability to buy what we need and what we want.
The American consumer again has spoken and the Chinese have started to listen.
Obviously, a trade war will impact some sectors more than others in the US. Farmers seem to be taking a hit but remember something, US farm exports to China were substantial and the Chinese tariffs on those exports are considerable yet prices in China have remained relatively stable. Inflation in China is even less than in the US. So where is the impact?
You say, they are getting grains from other places, Brazil, Argentine, Australia. Yeah, OK, Brazillian exports have only gone up a small percentage and There has been no change in other countries exports to China.
Are the Chinese eating less? No, it’s quite possible the government is stepping in and keeping prices stable so as not to impact Chinese consumers all that much.
I don’t really have all the answers but I do believe because we are seeing very little impact here and the Chinese are feeling it a little bit more, we are going to be dealing with this stupidity for a while longer.
40% Stocks
30% Fixed Income
30% Cash
It’s too easy to miss some great music if you just listen to what some producers and artists felt were a quick way to make a dollar but today I will.
Aretha Franklyn’s 30 Greatest Hits will help you understand how great a singer she truly was. Every song is near perfection and while there are several gems missing, Amazing Grace being one of them, this pretty much covers anything and everything you ever wanted to know about Aretha, The Queen of Soul.
The economy still seems to be humming along despite all the worries about the trade war with China and that’s not surprising. Not surprising you say? Yes. Not surprising. The US economy is built on two major themes, Services and Consumers.
The service sector continues to do well, adding jobs at a slower clip but still adding jobs and consumers continue to spend with almost religious vigor.
Let's take the service sector first and try and understand the overall impact of a China/US trade war on it. Apparently, there is no impact and people are still spending to get their driveways repaired, their lawns mowed, they are using the services of financial advisors, and so on. The service sector no matter what any of the business networks tell you have not been nor will they be impacted by the trade war. It’s a US centric business sector that while may have tentacles in China as far as investing is concerned, truly has little exposure to the trials and tribulations of this trade war.
The service sector that is being impacted is mostly in investments and equity market rotations which have put pressure on portfolios at times but in the end, it’s about the economy and the economy is still doing pretty well.
The bigger slice of the economic pie and the one that should be most impacted by a trade war is the consumer sector. Let’s be honest here. If you are feeling good about your job, your growth prospects as far as wages are concerned and you have your house of debt relatively in order, do you really care that some items you buy on a regular basis have gone up 5 or 6%? No, you don’t.
Do you care that the new lawnmower you were going to buy cost $20 more than the last time you bought one 12 years ago? No, you don’t.
I am just saying that the incremental increases we are seeing are being worked into the system just fine and it really isn’t hampering our ability to buy what we need and what we want.
The American consumer again has spoken and the Chinese have started to listen.
Obviously, a trade war will impact some sectors more than others in the US. Farmers seem to be taking a hit but remember something, US farm exports to China were substantial and the Chinese tariffs on those exports are considerable yet prices in China have remained relatively stable. Inflation in China is even less than in the US. So where is the impact?
You say, they are getting grains from other places, Brazil, Argentine, Australia. Yeah, OK, Brazillian exports have only gone up a small percentage and There has been no change in other countries exports to China.
Are the Chinese eating less? No, it’s quite possible the government is stepping in and keeping prices stable so as not to impact Chinese consumers all that much.
I don’t really have all the answers but I do believe because we are seeing very little impact here and the Chinese are feeling it a little bit more, we are going to be dealing with this stupidity for a while longer.
40% Stocks
30% Fixed Income
30% Cash